The decline in gold prices comes amid the upcoming December meeting of the Federal reserve system, which, as analysts suggest, will increase interest rate.
MOSCOW, Dec 15. Most large international banks expect that the first quarter will be the weakest gold in 2016, the price can drop to $ 900 per ounce. Thus the second half of 2016 and beginning of 2017, according to them, is a time when there will be the recovery of this precious metal.
Despite growth of quotations of gold in early 2015, to January high in 1293,5 USD per ounce in recent months, the price of the metal is reduced to the next “Nizam” is about 1070 dollars in mid-December.
This occurs with the upcoming December meeting of the Federal reserve system (FRS) the USA which will decide the fate of interest rates. Most analysts expect a rate hike — in this case, finally will take the main factor of the prolonged pressure on gold quotes.
Due to the uncertainty about the fed decision, which can be moved from December to the first quarter of next year, most banks are not waiting for recovery in gold prices throughout 2016 to the levels of the beginning of 2015.
French Bank Societe Generale expects that in 2016 the average price of the metal will be approximately $ 1000 per ounce, but by the end of the year predicts its decrease under this level.
“We expect that the price of gold will average $ 1,100 per ounce in the fourth quarter of this year, and the weakening of prices will continue in subsequent quarters. The price of gold in the fourth quarter of 2016 will average $ 955 per ounce,” — noted analysts of the Bank.
They also believe that the weak macroeconomic environment will be a major negative factor for gold, besides the monetary policy of the US and a stronger dollar will cause a steady decline in prices in the coming years.
Another French Bank, Natixis, expects that 2016 will be gold for another year of “weakness” and the price will fall below $ 1,000 per ounce. Dynamics of a rate hike will determine the rate of decline in the gold price, so the Bank’s forecast for next year is an average of $ 970 per ounce.
The Bank recommends to refrain from investing in gold, especially with a strong dollar. “I see no reason to weaken the US dollar next year. I believe that the dollar will remain a safe-haven and no reason to invest in gold”, — the expert notes Natixis.
Danish Bank ABN Amro predicts that in early 2016 the price of gold is expected to fall below $ 1,000 per ounce, but expected it to increase by mid-2017. “We believe that investors will continue to get rid of their positions in the coming months, and new “lower” prices will be achieved by the end of the first quarter of 2016″, — stated in the materials of ABN Amro.
Weak rates of increase of the rates in the US are not taken into account by the markets, rising yields on government bonds will boost to the levels of $ 900 per ounce or even lower, according to the Bank. The decrease in gold supply and healthy demand for jewelry will support the metal in 2017.
ABN Amro predicts in 2016 the average price of the metal 950 per ounce and $ 944 per ounce in 2017.
Goldman Sachs, JP Morgan
Us investment banks Goldman Sachs and JP Morgan also do not see any prerequisites for the recovery of the prices of the precious metal in 2016 to highs of 2015. The first confirms your prediction is on average $ 1,000 per ounce, a forecast of JP Morgan – $ 1,100 per ounce.
At the same time, JP Morgan analyst John bridges believes that in 2016, investors should be prepared to buy shares gold mining company.
The investment Bank predicts a few instances of rising interest rates, which will have a negative impact on the gold price. However, there is a chance that the growth rates would significantly weaken the economy, which will lead to another programme of quantitative easing (QE), and it returns the appeal of the precious metal.
Meanwhile, there is “high projections” — the British HSBC expects the price fluctuations from 1025 to 1275 dollars per ounce in 2016. The average price, in his opinion, the results of 2016 will be 1205$, and $ 1,300 in 2017. The Bank said factors such as strong demand in emerging markets, the expectation of the strengthening of the Euro against the us dollar and the resumption of inflows in the ETF.
German Commerzbank expects in 2016 the average price for the metal in 1150 dollars per ounce. The Bank, on the contrary, predicts a further exit of investors from ETF-funds. In 11 months of 2015, the outflow amounted to more than 100 tons. In the first quarter of 2016 the price of gold would have to decline, but then gradually accelerating its growth.
The consensus forecast
Thus, the majority of banks expects the first quarter will be the weakest gold in 2016: price may drop to $ 900 per ounce.
Thus the second half of 2016 and beginning of 2017 for the majority of banks is the time when there will be a recovery in metal prices.
Among the factors that can contribute to the growth of quotations during this period, the increase in the demand on Asian markets after a period of low prices, lowering prices in Euro, and the worsening economic situation in the US and the weakening dollar.